The Pirelli Group will invest $200 million dollars in its Santo André plant in Brazil. The investment is part of the company's 2009-2010 Industrial Plan.
Pirelli also invested $100 million in the plant, located in the state of Sao Paulo. Two-thirds of the combined $300 million will be used to expand tire manufacturing capacity; one-third is targeted for the Research and Development Center of Santo André.
When the investments are completed, the 80-year-old facility will have 20% more passenger and motorcycle tire manufacturing capacity.
In addition, the company says strengthening its presence in the area will consolidate the leadership of the Pirelli Group in South American markets. Approximately 90% of the company's South American tire production is concentrated in Brazil. Five of Pirelli's seven tire plants in South America are located in Brazil.
More than 35% of Pirelli's tire production in South America is exported to NAFTA area markets and other regions.
Pirelli says its growth target in Brazil for the three-year period from 2009-2011 is a 10% increase in revenues compared with 2008, "despite a 2009 which... will be affected by the strong crisis in demand worldwide."
That goal is not unrealistic, given that compared to the rest of the world, the fall in demand has affected Brazil less because of its emerging economy. The Brazilian plant also "offers a more efficient cost structure and a competitive base for exports."
In 2008, South America represented 33% of Pirelli Tyre SpA's overall sales revenue -- more than 4.1 billion euros (more than $6 billion based on the exchange rate).
